NEW YORK, March 2, 2021 /PRNewswire/ -- Today, Living Cities' Blended Catalyst Fund (BCF) announces a $2 million commitment to Advance, a regional, inclusive place-based fund managed by impact investment firm Mission Driven Finance.
The San Diego-based firm, co-founded by David Lynn and Lauren Grattan, works to close capital gaps in order to close opportunity gaps. Mission Driven Finance's place-based strategies invest in small businesses, social enterprises, and nonprofits that deliver critical services, create paths to quality jobs, and lead inclusive economic development.
BCF's investment in Advance, which is focused on the San Diego region, is the result of Living Cities' commitment to closing racial income and wealth gaps in U.S. cities.
Ben Hecht, CEO of Living Cities, said: "The Blended Catalyst Fund blends grants, philanthropic and commercial debt to fund the acceleration, scaling, and replication of promising practices. We believe that Mission Driven Finance's approach to lending, in which they engage with communities and use alternative underwriting methods that go beyond assessing credit scores, is on the vanguard of how our systems have to change if we are serious about closing capital and wealth gaps for entrepreneurs of color."
"The BCF loan enables us to level up and level the playing field in advancing inclusive economic opportunity in San Diego," added Lauren Grattan, Chief Community Officer of Mission Driven Finance. "In supporting emerging fund managers like us, Living Cities is prioritizing representation in finance—over four-fifths of our team consists of women and/or people of color, and over half are first- or second-generation Americans. We need more unusual suspects to scale to meaningfully shift the market."
David Lynn, CEO of Mission Driven Finance, said: "Traditional financial systems, structures, and policies in America have both intentionally and unintentionally restricted access to capital and opportunity. The result is significant racial and wealth inequality that hinders social mobility, dampens economic growth, and fosters conditions for political instability. Mission Driven Finance was built on the belief that we can change that."
While small businesses are crucial to economic growth, they have difficulty accessing capital: According to data from the Kauffman Foundation, 81% of entrepreneurs nationally do not have access to either a bank loan or venture capital. Additionally, access to capital is not evenly distributed, as entrepreneurs and communities of color face a legacy of structural racism when seeking startup and expansion capital for their small businesses. Research from the Cleveland Federal Reserve Bank demonstrates that, compared to their White peers, entrepreneurs of color are turned down more frequently and/ or are awarded smaller loan amounts, even when holding credit quality constant. These challenges in accessing credit limit business growth and affect income and wealth-building opportunities for individuals as well as communities.
Furthermore, the San Diego region is undergoing a rapid demographic transformation that mirrors future national trends, and through which the majority of San Diego's population now consists of people of color as the share of the White population is on the decline while the Latino and Asian American populations are on the rise. At the same time, there is a significant wealth divide in the region; San Diegans of color reside in some of the lowest income-per-capita neighborhoods in the U.S. while some of the highest income-per-capita communities are predominantly White. This has meant that historically, Black, Latino, and immigrant San Diegans have been shut out of the traditional financial system: research from the Woodstock Institute in 2017 demonstrated only 20% of businesses in low-income, predominantly communities of color in San Diego receive bank loans compared to almost 80% in high-income, predominantly White coastal areas.
Lynn said, "We support and invest in nonprofit, social enterprise, and for-profit ventures across a variety of industries, unified through impact, management, and finance. All portfolio ventures have a deep underlying commitment to advancing economic opportunity, tenacious leadership, and have a challenge getting sufficient, affordable capital from traditional sources."
Through Advance, Mission Driven Finance is filling the capital gap for women and communities of color in the San Diego region by providing flexible, affordable capital and business advisory support at crucial tipping points in a business's growth cycle. BCF's commitment will allow Advance to scale its efforts in supporting companies like LuckyBolt, a food social enterprise connecting local farmers and retail; CareCar, Inc., a non-emergency medical transportation platform; and Microtek, which combines engineering and life sciences to develop life-saving technologies. It will also support nonprofit organizations such as Skinny Gene Project, which works to prevent type 2 diabetes.
About Living Cities
Founded in 1991, Living Cities is a collaborative of the world's largest foundations and financial institutions. Living Cities fosters transformational relationships across sectors to connect those who are willing to do the hard work of closing racial income and wealth gaps. The organization partners with cross-sector leaders in cities across the country to imagine and create an America in which all people are economically secure, building wealth and living abundant, dignified, and connected lives. To learn more, visit www.livingcities.org.
About Mission Driven Finance
Mission Driven Finance is an impact investment firm dedicated to building a financial system that ensures good businesses have access to sufficient, affordable capital. Built from the ground up with a single purpose—to make it easy to invest in your community—all our funds and structured products are designed to close financial gaps that will close opportunity gaps. We work with local and national investors to help them create the impact they want, and work with businesses and community partners to help them get the capital they need. Mission Driven Finance was launched in 2016 in San Diego, CA, and is a Certified B Corporation. Visit missiondrivenfinance.com for more information.
Jeff Raderstrong, Living Cities, [email protected], 646-442-3236
SOURCE Living Cities